January 1, Binance Crypto Titan Admits Guilt: Money Laundering Law Breach

Binance founder and CEO Changpeng Zhao has resigned from the firm and pleaded guilty to violating criminal law as part of a deal with the United States government. Zhao’s resignation deal includes him pleading guilty to violating the Bank Secrecy Act, which deals with U.S. anti-money-laundering law. Attorney General Merrick Garland announced Zhao’s guilty plea during a press conference on Tuesday.

The Treasury Department revealed that Binance, the world’s largest cryptocurrency exchange, has agreed to pay over $4 billion in fines to settle civil accusations from federal regulators. The settlement with the Financial Crimes Enforcement Network alone is for $3.4 billion, marking the largest settlement in Treasury Department history.

According to the department, Binance settled over violations of the Bank Secrecy Act and apparent violations of multiple sanctions programs. The government accused Binance of failing to implement programs to prevent transactions with terrorists, including Hamas and the Palestinian Islamic Jihad. Binance also failed to prevent and report matching trades between U.S. users and those in sanctioned parts of the world, such as North Korea, Iran, and the Crimea region of Ukraine.

Treasury Secretary Janet Yellen stated that Binance “turned a blind eye to its legal obligations in the pursuit of profit.” She added that the historic penalties and monitorship to ensure compliance with U.S. law and regulations mark a milestone for the virtual currency industry.

The deal with Binance will reportedly end federal investigations into the exchange, which have been ongoing for years. Zhao will be allowed to keep his majority ownership of the company, but he won’t be allowed to hold an executive position at the firm.

As recently as June, the Securities and Exchange Commission (SEC) filed a lawsuit against Binance and Zhao, accusing them of lying to federal regulators and mishandling customer funds. The SEC alleged that Binance had been secretly diverting customer funds to another trading entity controlled by Zhao, engaging in fraudulent trading and showing “blatant disregard” for federal securities law.

In March, the Commodity Futures Trading Commission (CFTC) announced it was suing Binance and Zhao for allegedly breaking U.S. regulatory law, labeling the firm’s compliance efforts a “sham.” The CFTC also accused Binance of lacking a program to spot money laundering and the financing of terrorism.

Following Zhao’s deal with the U.S. government, the price of bitcoin dropped more than 2% to just below $36,800. Binance Coin (BNB), the cryptocurrency token developed for trading on the exchange, immediately lost nearly 9% of its value and was trading at $238 per coin.

Why It Matters

Binance, the largest cryptocurrency exchange, has been slapped with a historic $4 billion fine for violating US anti-money-laundering laws. This is a wake-up call for those who think they can evade the law. The government’s crackdown on Binance shows that even the biggest players in the crypto world can’t escape the long arm of justice. The penalties and monitorship will help ensure compliance with US law and regulations. It’s time for other crypto companies to take note and make sure they’re following the rules, or they too may face the consequences. While cryptocurrencies offer many potential benefits, they must be held to the same standards as traditional financial institutions to protect our nation from illegal activities.

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